Monday, June 5, 2023
HomeHeadlinesChina’s 2023 crude oil imports set for 6.2% rise, but risks prevail

Subscribe

To our FREE newsletter
Get all the latest maritime news delivered straight to your inbox.

China’s 2023 crude oil imports set for 6.2% rise, but risks prevail

China’s crude oil imports will average 10.8 million barrels per day (bpd) in 2023, matching the previous record high from 2020, according to the think tank of the country’s leading energy group.

Imports will rise 6.2% from last year to 540 million tonnes, while refinery processing will gain 7.8% to 733 million tonnes, equivalent to 14.66 million bpd, China National Petroleum Corporation’s Economics and Technology Research Institute (ETRI) said in its annual industry outlook released on Monday.

The forecasts are largely in line with those of private analysts, who have tipped a rebound in China’s fuel consumption as the world’s second-largest economy reopens after ending its strict zero-COVID policy late last year.

The ETRI forecast is for crude oil imports to rise by 630,000 bpd in 2023, which is below the 900,000 bpd expected by the International Energy Agency, but above estimates from some analysts, such as Wood Mackenzie and S&P Global Commodity Insights.

Forecasts are useful insofar as they provide insight into the expectations of participants in the market, but it’s also useful to look at some of the risks around the estimates.

What is interesting with the ETRI forecasts is that they would seem to show that China’s refiners are still expecting to add crude oil to stockpiles over 2023.

Assuming domestic oil production remains relatively steady over 2023 at the 4.23 million bpd achieved in the first two months of the year, it implies that a total of 15.03 million bpd will be available to refiners from imports and local output.

This is some 370,000 bpd more than the ETRI forecast for refinery throughput of 14.66 million bpd.

If these sort of volumes are added to inventories in 2023, it would be lower than the 740,000 bpd added to storage tanks in 2022.

China doesn’t disclose the volumes of crude flowing into or out of strategic and commercial stockpiles, but an estimate can be made by deducting the amount of crude processed from the total of crude available from imports and domestic output.

NEW REFINERIES

It’s likely that some of the oil heading for storage will go to build working inventories for new plants expected to be commissioned this year.

Two new refineries – PetroChina’s Guangdong Petrochemical and Jiangsu Shenghong Petrochemical with a combined capacity of 520,000 bpd – are expected to enter commercial operation in the coming months, industry sources said last month.

A third new plant, Shandong Yulong Petrochemical’s 400,000 bpd project, may also begin crude imports for possible test runs by the end of the year, a company source told Reuters.

Flows in, or indeed out of, either commercial or strategic reserves are the biggest X-factor for China’s crude oil imports.

The assumption of modest inventory builds as part of the commissioning of new refining units is a safe choice, but it’s worth noting that China’s refiners and the authorities in Beijing tend to use stockpiles to smooth out prices, even if they don’t talk about this in public.

Imports could rise by more than expected if crude oil prices drop and remain low, a situation that is possible if the world economy goes into recession, or a banking crisis ensues after the collapse of two U.S. lenders and the forced sale of Credit Suisse.

Conversely, if global oil demand growth is robust and prices head higher, Chinese refiners may choose to reduce imports and dip into their reserves.

Another factor that isn’t subject to market imperatives is the level of fuel exports, which is set by the government through the issuing of permits.

Exports of refined products ramped up in recent months as Beijing sought quick economic stimulus and allowed refiners to take advantage of strong margins in Asia for fuels, especially diesel.

But there is no guarantee this policy will persist over the whole of 2023, and if domestic demand does rebound, then it’s likely fuel exports will be curbed.

Source: Reuters

Related Posts

Video

Finance & Economy
Shipping News
Ports

BW LPG appoints new CFO

BW LPG announced that it has appointed Ms Samantha Xu as Chief Financial Officer (CFO), effective 1 September 2023. Ms Xu has over 20 years...

Frontline Posts Highest First Quarter Results Since 2008

Frontline plc reported unaudited results for the three months ended March 31, 2023: Highlights Highest first quarter profit since 2008 of $199.6 million, or $0.90 per...

Diana Shipping posts slightly lower Q1 profit; takes out $123m in loans

Diana Shipping reported net income of $22.7 million and net income attributed to common stockholders of $21.3 million for the first quarter of 2023....

CMA CGM Profit Eases as Container Transport Demand Wanes

CMA CGM expects its profit to ease further for the rest of the year after a first-quarter decline, as an uncertain economy and influx...

Seanergy ‘well positioned to benefit from positive trend in Capesize market’

Seanergy Maritime Holdings Corp., announced its financial results for the first quarter ended March 31, 2023, and declared a quarterly dividend of $0.025 per...

Taiwan Shipping Firms Set to Hand Out Bumper Bonuses Again

Taiwanese shipping companies are handing out bumper mid-year bonuses despite a slump in global...

Baltic index hits over 3-month low amid lower coal imports

The Baltic exchange’s main sea freight index extended losses for the 15th session straight...

Baltic index falls for the month as vessel demand wanes

The Baltic exchange’s main sea freight index recorded its first monthly decline in four...

North Korea missile tests endanger shipping, UN maritime agency told

North Korean missile tests are endangering the safety of commercial shipping in busy sea...

Singapore Clamps Down on Tankers as Dark Fleet Grows

Singapore’s detentions of oil and chemicals tankers have surged since early last year, highlighting...

DP World Completes Terminal Expansion Project Vancouver Port

DP World has completed the AED954 million ($259.78 million) Centerm expansion project, increasing container throughput at the Port of Vancouver by 60 percent. The terminal...

DP World completes AED 954 million Vancouver port expansion

DP World and the Vancouver Fraser Port Authority have celebrated two historic events – the completion of the Centerm Expansion Project at DP World...

Alexandroupolis port gets 24 million euros of EU funding

Greece has secured 24 million euros ($26 million) in European Union funding to upgrade its northern Aegean Sea port of Alexandroupolis, privatisation agency HRADF...

Port Hedland Iron Ore Exports Down 5% in April

Pilbara Ports Authority (PPA) has delivered a total monthly throughput of 57.7 million tonnes (Mt) for April 2023. This throughput was a two per cent...

APM Terminals Reveals $1 Billion Investment in Brazil

APM Terminals’ CEO Keith Svendsen has pledged an investment of about US$1 billion in the company's Brazilian operations up to 2026. The amount includes around...